0521-99-M United Steelworkers of America, Local Union 13491-21, Applicant v. Fincore Industries Inc., Responding Party.

BEFORE: Marilyn Silverman, Vice‑Chair.

APPEARANCES: Robert Healey, Mohamed Baksh, Fil Falbo and Marlene Gow for the applicant; Richard Drmaj and Sheldon Gross for the responding party.

DECISION OF THE BOARD; October 12, 2000

1. This is a ministerial reference made pursuant to section 115(1) of the Labour Relations Act, 1995, S.O. 1995, c.1 ('the Act'). That section reads as follows:

2. (1) The Minister may refer to the Board any question which in his or her opinion relates to the exercise of his or her powers under this Act and the Board shall report its decision on the question.

3. The matter was heard before me on September 13 and 15, 1999, January 18 and 31, 2000, February 2, 2000, June 21, 2000 and concluded on July 6, 2000.

4. Fincore Industries Inc. (“Fincore”or “the company”) and the United Steelworkers of America, Local Union 13491-21 (“the union”) are parties to a collective agreement executed on September 5, 1996 (“the collective agreement”). The collective agreement was for an initial three year term of operation. The date set for the expiration of the collective agreement was April 27, 1999 with an option to extend for a 4^th and 5^th year.

5. By letter dated February 5, 1999 the union gave the company notice to bargain. The company responded by stating that the collective agreement had been extended into a 4^th year and that notice to bargain was premature. After further correspondence between the parties, the union, on March 11, 1999 requested the appointment of a conciliation officer pursuant to section 18 of the Act. Section 18 provides:

6. (1) Where notice has been given under section 16 or 59, the Minister, upon the request of either party, shall appoint a conciliation officer to confer with the parties and endeavour to effect a collective agreement.

(2) Despite the failure of a trade union to give written notice under section 16 or the failure of either party to give written notice under sections 59 and 131, where the parties have met and bargained, the Minister, upon the request of either party, may appoint a conciliation officer to confer with the parties and endeavour to effect a collective agreement.

(3) Where an employer and a trade union agree that the employer recognizes the trade union as the exclusive bargaining agent of the employees in a defined bargaining unit and the agreement is in writing signed by the parties, the Minister may, upon the request of either party, appoint a conciliation officer to confer with the parties and endeavour to effect a collective agreement.

(4) Despite anything in this Act, where the Minister has appointed a conciliation officer or a mediator and the parties have failed to enter into a collective agreement within 15 months from the date of such appointment, the Minister may, upon the joint request of the parties, again appoint a conciliation officer to confer with the parties and endeavour to effect a collective agreement, and, upon the appointment being made, sections 19 to 36 and 79 to 86 apply, but the appointment is not a bar to an application for certification or for a declaration that the trade union no longer represents the employees in the bargaining unit.

This request was made on the basis of the union’s position that the agreement would expire on April 27, 1999. The employer objected to the appointment on the basis that in its view, the collective agreement had been extended for a 4^th year. Both the union and the employer provided further responses to the Ministry on their respective positions and the matter was referred to the Board as a ministerial reference on May 19, 1999.

5. The basis of the dispute is the interpretation of certain articles in the collective agreement which are reproduced below. The option to extend the agreement into the 4^th and 5^th year was available to the parties based on the introduction and development of a gain sharing plan that was in conformity with the terms of the collective agreement. The company asserts that that condition has been met and the agreement extended; the union says that it has not been met and the agreement expired after the 3^rd year. If the company is right, the request for the appointment of a conciliation officer is premature. If the union is right the request is timely and the Minister has the authority to make the requested appointment.

6. In response to this dispute the Minister requests the Board’s advice on the following question:

“Does the Minister of Labour have the authority to make the requested appointment of a conciliation officer in the circumstances of this case?”

7. It is clear that if the union is correct and there is no gain sharing plan as contemplated by the collective agreement then the answer to the question must be yes and the union is entitled to have a conciliation officer appointed under section 18 of the Act. If the company is correct the collective agreement continues and no such appointment should be made at this time.

The Collective Agreement Provisions

8. The dispute arises out of the interpretation and interrelationship of the following articles of the collective agreement:

ARTICLE 28 – GAIN SHARING

The Parties agree that in addition to the negotiated wage increase to introduce a Gain Sharing Plan that will be for bargaining unit employees. The Gain Sharing Plan will be paid out on a per hour worked basis and shall take into account the negotiated wage increase as part of its labour costs. The Gain Sharing Plan shall commence as soon as practicable but in no event later than September 1st, 1996 and be payable every three months thereafter.

The company agrees to develop such a Gain Sharing Plan in co-operation with the Union and that the Union shall have a representative on the Gain Sharing Committee.

ARTICLE 31 - OPTIONAL 4TH AND 5TH YEAR

The Parties agree to extend this three year agreement for a fourth year provided that the wage increase together with the Gain Sharing Plan payments in the third year of the agreement is at least three (3%) per cent greater than the previous year's average wage rate prior to the annual increases paid. In which case a further two per cent (2%) generated by the Gain Sharing shall be rolled into the wage rates commencing at the start of the fourth year and_;

A further one year extension shall be granted (fifth year) provided that the wage increase together with the Gain Sharing Plan payment for the fourth year of the agreement is at least three (3%) per cent greater than the previous year average wage rate prior to the annual increase. In which case a further two per cent (2%) generated by the Gain Sharing shall be rolled into the wage rates commencing at the start of the fifth year.

ARTICLE 33 – DURATION AND TERMINATION OF AGREEMENT

33.01 This Agreement shall become effective as of the date of ratification and shall continue in effect up to and including the 27^th day of April, 1999 unless extended in accordance with Article 31 of this agreement.

The Evidence

9. The witness called by the company was Mr. Sheldon Gross, chief operating officer and chairman. He has been the chief operating officer and chairman of the company since it was acquired in 1992. The company is in the business of coating and painting products and materials for original equipment manufacturers in the automotive and office furniture industries. These products are then returned to the original manufacturers.

10. The evidence presented at the hearing suggested two quite different perceptions of what occurred between the parties. Mr. Gross suggested that the company’s gain sharing plan was incorporated into the collective agreement and existed from the time to when the agreement was signed. Mr. Doug Olthius, a union researcher contended that discussion occurred between the parties concerning a gain sharing plan but no actual agreement was reached on these matters. From the union’s perspective no gain sharing plan was ever put into effect.

11. Fincore employs approximately 180 employees (referred to as associates); 140 of whom are members of the bargaining unit for which the applicant holds bargaining rights. Mr. Gross was a member of the negotiating committee which negotiated Article 28 of the collective agreement. Mr. Gross’ evidence is that there was a gain sharing plan in existence and that gain sharing plan met the requirements of Article 28 so as to extend the term of the collective agreement into the 4^th year. The gain sharing calculations that were prepared under his instruction in the first two years of the collective agreement the company experienced losses such that no gain sharing could be realized.

12. On March 26, 1998 the company advised the bargaining unit employees that it would be making a 1% gainsharing distribution effective May of that year. That announcement was made in a memorandum of that date from Mr. Sid Persaud, Controller, to the bargaining unit employees. Mr. Gross’ saw that distribution as being made pursuant to the gain sharing plan in existence at that time.

13. In May of 1998, once the distribution to employees had been made, the union grieved that action on the basis of the “improper implementation of the gain sharing and calculation”. That grievance was withdrawn on June 11, 1998. In the letter to Mr. Gross withdrawing the grievance Mr. Mohammed Baksh, staff representative for the union, stated the union’s position as follows:

June 11, 1998

Mr. Sheldon Gross

General Manager

Fincore Industries Inc.

10 Melford Drive, Units 1-8

Scarborough, Ontario

M1B 2G1

Dear Mr. Persaud

RE: Gain Sharing

I am writing to inform you that the 1% wage increase given to the employees as of May 1, 1998 does not meet the requirements of the Collective Agreement in order to extend the Collective Agreement for the optional fourth and fifth year pursuant to Article 31 of the Collective Agreement.

Consistent with the provisions of the Collective Agreement, specifically Article 33.02, please be advised that the Union will be providing you with written notice at the appropriate time in order to commence negotiations for the renewal of the Collective Agreement.

Accordingly, the union is withdrawing Grievance EC-48 without prejudice and precedent and has the right to re-file this grievance at any time during the last ninety days of the term of this Agreement.

Please call if you have any questions.

14. No other grievance on this issue was filed. In Mr. Gross’ view the withdrawal of that grievance meant that the union accepted the gain sharing plan and the distribution.

15. Mr. Gross testified that it was his understanding that the company had met the requirements set out in the collective agreement to allow it to rely on the extension for the fourth year. The reason is that the company had provided the wage increase together with the gain sharing payments in an amount which was greater than 3% of the previous year’s average wage rate prior to the annual increases. This met the Article 31 requirement. He suggests that the company pay out of the amount calculated above to the employees combined with the withdrawal of the grievance filed on May 5, 1998 created what counsel for the employer describes as an estoppel in the company’s favour.

16. In respect of the actual calculations contemplated under Article 31, Mr. Gross asserts that the wage increase together with the gain sharing plan payments in the third year of the agreement were at least 3% greater than the previous year’s average wage rate prior to the annual increases. In support of this he relies on both a gain sharing report prepared under his instruction and an average wage rate calculation for the years in question. He started to accumulate this information in order, he says to ensure conformity with the provisions of Article 31.

17. According to Mr. Gross, prior to September, 1996 various meetings occurred. Mr. Gross represented the company. He did not recall the dates of these meetings nor could he locate his notes from these meetings He stated that Ron Brown, union steward, Marlene Gow, acting staff representative, Ravikulan Kovindasamy, plant chairperson were in attendance at the meetings. Possibly Horace Singh, staff representative, Sid Persaud, controller were also in attendance. He thought Mr. Doug Olthius from the union’s research department was also in attendance. Mr. Gross did specifically recall what he referred to as”town hall” meetings where gain sharing was discussed. These meetings involved the showing of a videotape and presentation by Mr. Gross. Although these town hall meetings were described in a general way by all, they were not disputed to have occurred by two of the unions witnesses, Mr. Ron Brown and Mr. Albert Leblanc two union stewards at the relevant time.

18. Mr. Gross agrees that some meetings did occur after September 1996 but cannot recall the dates. He says that the content of the discussions covered his gain sharing report and average wage calculations documents. Different scenarios were discussed with the union during these post-September 1996 meetings. He says that the union never got back to the company with a finalized proposal for gain sharing.

19. The company’s position as expressed by Mr. Gross is that there was a gain sharing plan in existence effective September 1996 and that plan was embodied in one paragraph of a gain sharing report generated by him. The gain sharing report was the formula the company implemented with reference to Article 28.

That formula was:

When the gainshare earned is a positive number, a gainshare distribution will be made to each employee covered by the CBA [sic – collective bargaining agreement]. The gainshare earned (positive number) will be multiplied by the percentage of the employee’s hours worked (numerator) in relation to the total hours worked (denominator) for of [sic] all employees covered by the CBA. The employee shall be paid their gainshare distribution at least quarterly. However, when there is a gainshare distribution to the employees covered by the CBA, (positive gainshare earned number) the minimum distribution shall be one (1%) percent of employee’s wages paid.

20. According to Mr. Gross, the meetings with the union subsequent to September 1996 were for the purpose of discussing the details of the plan but the plan existed prior to that date.

21. Mr. Gross contends there was a gain sharing committee in place as contemplated by Article 28 and the union never requested that a representative be put on that committee. It was that committee, absent a member of the union, that put in place the 1% gain sharing distribution that was reflected in the memo of March 1998 from Mr. Persaud to all employees.

22. Mr. Doug Olthius was the primary witness called by the union. He is currently the applicant’s area co-ordinator in Sault Ste Marie. At the material time he was a researcher for the applicant’s national office. As part of his job duties he advised the applicant on profit and gain sharing plans. It was in this capacity that he was called upon by Ms. Marlene Gow who was the then acting staff representative responsible for the applicant’s members at the Fincore facility to assist with the gain sharing negotiations. According to a note prepared by Ms. Gow she approached Mr. Olthius on September 30, 1996 and invited him to speak to Mr. Gross directly in respect of the gain sharing plan.

23. Mr. Olthius’ recollections differ somewhat from Mr. Gross’. Mr. Olthius says he met to discuss gain sharing on October 23, 1996, October 31, 1996, November 25, 1996 and May 5, 1997. Mr. Olthius presented notes taken outlining the dates of his meetings with Fincore, who was in attendance and what was discussed. According to Mr. Olthius, Mr. Gross was at the October 31 and November 25 meeting and Mr. Persaud was at the October 23, November 25 and May 5 meetings.

24. Ms. Gow also gave evidence on behalf of the union. She stated that she was assigned to replace Mr. Horace Singh as the staff representative at the company in late 1995. She involved Mr. Olthius (or more specifically the research department who then assigned Mr. Olthius to the task) in the gainsharing issue as she was not well versed in this area. She was present at meetings with Mr. Olthius, Mr. Kovindasamy and Mr. Brown but she does not recall most of the contents of the discussions as Mr. Olthius was responsible for and led the discussions.

25. Mr. Olthius’s notes and his evidence were detailed. To the extent that his evidence differs from that of Mr. Gross I prefer the evidence of Mr. Olthius as his recollections and notes were more precise; Mr. Gross’ was vague and he was unable to locate any notes. Overall, Mr. Olthius’ evidence appears to be the more reliable.

26. The salient features of Mr. Olthius’ testimony are that he first began discussions with Ms. Gow in October 1996. The first meeting with the company occurred on October 23, 1996 when Mr. Olthius met with Mr. Persaud. He did not meet with anyone from the company prior to that date. Mr. Brown and Mr. Kovindasamy were in attendance at that meeting. Mr. Persaud spoke of the states of affairs of the business of Fincore and the company’s view of the gain sharing plan. Mr. Persaud spoke of the necessary motivators for employees and the nature and timing of payments. The company appeared willing to negotiate gain sharing at this meeting and provided information on specifics regarding gain sharing.

27. On October 31, 1996 another meeting was held with Mr. Gross in attendance. Some material had been prepared and presented by Fincore. Once again the business of Fincore was discussed as well as Mr. Gross’s view of the gainsharing plan. Specifics numbers and targets were discussed. At the end of this meeting, which Mr. Olthius characterized as the kind of discussion you would have when negotiating a gain sharing plan, Mr. Olthius volunteered to prepare written material and present it to the company with respect to (a) the issues concerning the union (b) a draft agreement and (c) calcu-lations. He did so by letter and attachments dated November 7, 1996 addressed to Mr. Persaud. He also requested information from the company for the next scheduled meeting of November 25, 1996.

28. The next meeting occurred on November 25, 1996. Mr. Olthius had prepared a 15 point document to be used as a basis for discussion with the company as to what should be contained in the language of a final plan. There was no agreement from the company concerning the contents of his document.

29. At the November 25 meeting the company and the union reviewed some of what Mr. Olthius had prepared and according to his evidence the company agreed to get back to the union on this proposal. There were no further meetings with the company or any communication on this matter between the November 25, 1996 and May 5, 1997.

30. On January 15, 1997 Ms. Gow forwarded a letter to Mr. Gross proposing dates for further meetings on the gain sharing plan. She does not recall whether or not she received a response.

31. In any event the parties met on May 5, 1997. At that meeting, with Mr. Persaud in attendance, further discussion occurred, though less in relation to gain sharing specifics and more in relation to the performance of the company at that time. That meeting ended with Mr. Olthius asking Mr. Persaud for the company’s best package on gain sharing in writing. Aside from some phone calls and further follow up by Mr. Olthius this seems to mark the end of any meaningful discussion on gain sharing. Then, on March 26, 1998 the company announced the 1% gain sharing distribution.

32. Mr. Olthius asserts that the purpose of the meetings described above was to discuss a gain sharing plan. The company representatives never indicated at these meetings that a gain sharing plan was already in place. Mr. Olthius states that he never saw the September 1996 gain sharing report with the plan described at the bottom of the page of this report any time during these meetings. The first time he saw the report was in March of 1999. Furthermore he says the company representatives never brought to his attention that the language found on the bottom of the gain sharing report was its position on gain sharing. In any event it was not language that the union would agree to.

33. In summary, Mr. Olthius testified that the company never expressed during their discussions with him that they had a gain sharing plan in existence or that they would change that plan at the company’s convenience. Matters were left on the basis that the company would revert to the union on its proposals. That never happened and no plan was agreed upon.

Submissions

34. The company argues that the factual dispute to be determined is set out in paragraph 6 of the ministerial reference. That is as follows:

35. There appears to be a factual dispute as to whether there has been a “wage increase” together with “gain sharing plan payments in the third year of the agreement” that are “at least 3% greater than the previous year’s average wage rate prior to the annual increases paid”: see section 31 of the collective agreement between the parties (“Agreement”), which is attached.

36. My inquiry is not confined to that question. The inquiry is directed to whether the Minister of Labour has the authority to appoint a conciliation officer in the circumstances. The factual dispute described above is only part of the inquiry and one that I need determine only if I find that the plan is one that meets the requirements of the collective agreement such as to bring the extension provision into play.

37. The company argues that in advising the Minister I must consider whether there is a gain sharing plan, what it is, what the effect of the May 26, 1998 amendment (as they call it) to the plan and whether there has been a violation of Article 28 of the collective agreement. Counsel argues that when the collective agreement was signed in September 1996 a gain sharing plan was in effect and the formula was all that was left to be discussed. He contends that the plan exists by operation of the definition of collective agreement found in the Act combined with the contents of the actual agreement here at issue. He asserts that the meetings attended by Mr. Olthius and others and the accompanying documentary evidence were simply for the purpose of arriving at the details to be incorporated into the plan that was in existence.

38. In respect of the requirement of Article 28 that the company co-operate with the union, counsel asserts that the evidence bears out that full financial disclosure was made to the union and that there was a gain sharing committee which was the meetings attended by Mr. Olthius and others. The union did not request further meetings which counsel submits they had a responsibility to do in the circumstances. The company submits that the March 26, 1998 letter was an amendment to the existing gain sharing plan and that prior to that time there was a gain sharing plan in effect but it did not generate any distribution.

39. Further the company argues that the “co-operation of the union” does not amount to consent of the union. In support of this position the company relies on the case of United Steelworkers and Raybestos-Manhattan Ltd. (1962), 12 L.A.C. 217 (Bennett). The company says that the proper place for this dispute is the grievance procedure under the collective agreement and when the union withdrew the grievance filed May 5, 1998 for the “improper implementation” of the gain sharing plan this signalled an acceptance that a gain sharing plan was in existence. The only remaining issue then was the formula or calculation of that plan. The company maintains that their calculations were never challenged and that although the union did not agree with the calculations the factual question found in paragraph 6 of the ministerial reference is met.

40. The company then submits that on this analysis I should advise the Minister in response to the reference that a conciliation officer should not be appointed as the collective agreement has not expired but rather has been extended for a 4^th year by the combined operation of Article 31 and 33.01.

41. The company argues in the alternative that the doctrine of estoppel operates to defeat the union’s claim. They assert that the union failed to grieve the proper establishment of the gains sharing plan as of the date of its execution (September 5, 1996 – the date of execution of the collective agreement) and when they did file a grievance they withdrew it. The company substantially increased the payments that would normally be due with no objection by the union. This in the company’s view amounts to detrimental reliance and as such estoppel prevents the union from advancing the position it does.

42. The union asks me to advise the Minister that it is proper in these circumstances to appoint a conciliation officer as the requirements to extend the operation of the collective agreement for a 4^th year have not been met. They assert three arguments. First, no gain sharing plan exists. Second, if I find that a gain sharing plan does exist it does not comply with required provisions of the collective agreement. Third, if such a plan does meet the requirements of Article 28 then it does not generate the 2% distribution in the last year of the collective agreement, as contemplated by Article 31.

43. The union argues that the gain sharing plan was not developed “in co-operation with the Union” as required by Article 28. In support of this they rely on a number of arbitral authorities as to the obligations imposed on employers when collective agreement language requires discussion or consultation with the union prior to taking action including Re Eldorado Nuclear Ltd. and Public Service Alliance of Canada, Eldorado Group 1973 CanLII 2039 (ON LA), 5 L.A.C. (2d) 94 (Weatherill); Re Burrard Yarrows Corporation, Vancouver Division, and International Brotherhood of Painters, Local 138 1981 CanLII 4436 (BC LA), 30 L.A.C. (2d) 331 (Christie); Re Ottawa General Hospital and Ontario Nurses’ Association, Local 083 1986 CanLII 6717 (ON LA), 27 L.A.C. (3d) 64 (Frankel); and Re Ivaco Rolling Mills and United Steelworkers of America, Local 8794 1997 CanLII 25131 (ON LA), 67 L.A.C. (4^th) 66 (Adell).

DECISION

43. The company conducted two explanatory sessions on gains sharing prior to Article 28 of the collective agreement coming into force. These sessions cannot be characterized as gain sharing plan meetings. Next were the meetings between the union and the company in the fall of 1996 and spring 1997. From the evidence of both parties and the detailed and in my view reliable evidence of Mr. Olthius these meetings can be characterized as meetings for the purpose and intent of negotiating a gain sharing plan that would meet the requirements of the collective agreement and thereby extend the term of the collective agreement. The requirements of Article 28 were to “develop” a gain sharing plan , “in co-operation with the Union” and to have a “representative” of the union on the gain sharing committee. Up until that point it seems as though the parties were moving towards fulfilling the requirements of Article 28. For whatever reason in the spring of 1997 and punctuated by the meeting on May 5, 1997 the company appears to have lost its desire to continue the process. The union decided to leave the matter and await negotiations. That was a reasonable response. The fact that they filed a grievance and then withdrew it does not in these circumstances raise an estoppel against the position the union now seeks to take. The union did not expressely waive any rights.

44. The company then put something in place as of March 26, 1998 and made the 1% distribution. That distribution the company asserts was in compliance with the gain sharing plan that was described on the bottom of its gain sharing reports. Even if I assume that the plan introduced and implemented by the company was some form of gain sharing plan it was not a plan contemplated by Article 28 of the collective agreement. It was introduced, developed and implemented unilaterally by the company.

45. The company did not have to have union’s agreement or consent on a gain sharing plan. Article 28 does not require an agreement. The company embarked upon the process of consultation and co-operation once the collective agreement was signed. The meetings attended by Mr. Olthius was part of that process. When the company abandoned that process it also gave up the right to rely on the extension of the agreement. The union then decided to await its right to negotiate the collective agreement as though the gain sharing plan had never been developed for in fact the gain sharing plan contemplated by the agreement had never been developed. The collective agreement therefore expired on April 27,1999 in accordance with Article 33.01.

46. The Minister posed the following questions:

“Does the Minister of Labour have the authority to make the requested appointment of a conciliation officer in the circumstances of this case?”

47. The answer to the Minister’s question is yes. Having regard to the evidence and submissions of the parties, the collective agreement was effective until April 27, 1999. The collective agreement expired on April 27, 1999. The request by the union for the appointment of a conciliation officer was timely. Therefore, the Minister of Labour has the authority to make the appointment of a conciliation officer as requested by the union.

“Marilyn Silverman”

for the Board